Soper, bank attorney spar at EDA
The chairman of the Woodford Economic Development Authority (EDA) and an attorney representing a key lending bank exchanged sharp words at the group’s monthly meeting Friday, Jan. 27. The dispute began during discussion of the EDA’s request that United Bank and three others that lent money to buy Midway Station allow the group to keep $12,000 annually from future lot sales in Midway Station. That money would allow the EDA to be self-sufficient, said Chairman John Soper, and the EDA would keep the $12,000 only if $135,000 worth of property was sold. Soper asked Jeremy Gray, the senior market lender for United Bank’s Woodford County operations, whether he’d gotten an answer yet on the EDA’s request to the banks. Gray said he hadn’t, but had forwarded two letters of recommendation to the other banks. Soper read from an October letter (not provided to the press) from United Bank involving the release of the $1.6 million tract at Midway Station to Lakeshore Learning Materials. Soper said the letter asked for two things, among them a letter from the EDA saying that the land would be “used for a project deemed in furtherance of a public purpose.” Soper said in the Lakeshore deal, the company’s attorney wrote such a letter and he felt comfortable signing it because he knew exactly what the project would be. “Quite honestly, I disagreed that the letter was needed, but I wasn’t about to let a $1.6 million closing go by the wayside,” Soper said. Developer Dennis Anderson, who has an option to sell property at Midway Station in return for paying the $8,375 monthly interest on the loan, had a pending sale on a small lot there. Soper said he’d hoped the public purpose language had been resolved, but the bank had not issued the release necessary for the sale. Attorney Sarah Mills of Stoll, Keenon and Ogden, said when bonds were issued in 2004, the EDA signed a mortgage deed of trust using Midway Station as collateral for the bonds. “United Bank is your trustee. Under this mortgage … they have a fiduciary duty to help the EDA comply with the section 902 regarding the release of land. And it says that the trustee cannot release the land without receiving a letter with what we requested of the EDA last October. Each time a parcel of land is sold, that letter (affirming the land would be used for a public purpose) is supposed to be given under the terms of the mortgage that you all signed,” Mills said. Mills said until there was an amendment removing the public purpose requirement, the bank will need to ask for the letter. She said the bonds are tax-exempt, and every time Midway Station property is sold, there could be a reissuance of the bonds – and an audit could result in the loss of their tax-exempt status. Mills said the bank didn’t have a complete transcript of the back-and-forth over the years and would like to see the tax certificate that was issued with the bonds. The EDA’s bond counsel at the time could help clear up the matter, she said. If the EDA kept money from land sales, that could also affect the tax-exempt status of the bonds, she said. “What you’re asking the EDA is to go out and hire a bond counsel, and we’re not going to do that,” Soper said. In response to a question from EDA Executive Director Craig McAnelly, Mills said it was the EDA that made the determination of a public purpose. “Every action this board takes is deemed to be in the public’s best interest, even disposing of property they’ve decided not to use. So it’s up to the public or someone else to challenge that …” McAnelly said. Mills reiterated that the public purpose language from the EDA was a requirement of the mortgage. “Did you do that when the other lots were sold … when Jimmy Debold bought his first lot?” Soper asked. “I have no idea,” Mills replied. “Then why are you putting this requirement on us now, because I don’t think that happened then,” Soper said. Gray said it had been more than nine years since the last partial release. McAnelly said the language required the EDA take a stand, to which Soper added, “That we’re not going to take. … Dennis Anderson could walk in here tomorrow and pay us $3.6 million, and we’d have no clue what he’s going to do with the land. And you’re asking me to sign a letter that says I’m deeming that in the furtherance of a public purpose. I’m not putting my name to that letter, and I wouldn’t recommend anyone on this board do the same. “So my answer to you is, ‘If you want the property back, take it.’ We’re not signing these letters. My other answer to you is that I don’t think the bank’s acted in good faith, because you accepted all the interest payments from Dennis Anderson …” Soper said, to which Mills attempted to interject. “Excuse me, I’ve got the floor right now,” Soper said in a raised voice. “You knew this was out here, you accepted his interest payments. Right now, Dennis Anderson, the last conversation I had with him, he said, ‘John, if it’s going to be this hard to pay you off, I’m just going to walk.’” Soper said the bank was putting the county and city of Midway (which borrowed the money for Midway Station) in a bad position because they wouldn’t accept a pay-off. “This is in your mortgage,” Mills said. “It’s your mortgage. It’s your bond,” Soper said. Mills and Soper argued for several minutes, with Soper repeating that he believed the bank was not acting in good faith. “… Then I would recommend that Dennis Anderson quit paying his interest, because you’re not going to take his payoffs, then you all have got the damn property back,” Soper said. After the meeting, Soper said the EDA still owes about $3.4 million of the approximately $6 million borrowed for Midway Station. On Monday, Soper forwarded an email showing that United Bank had signed off on the Debold sale. Gray told The Sun that the decision was motivated by the desire to maintain a good relationship with Anderson and maintain the ability to sell land. Gray said they could modify or waive the public purpose language, but bank officials had to let the EDA know there’s a chance of losing the tax-exempt status. “If they’re okay with that minimum chance, then we’re okay with waiving it,” Gray said. Purchase option After meeting in executive session, the EDA voted unanimously to secure an option to purchase Versailles Methodist Church and two adjoining buildings at 110 North Court Street. Soper said the option gives the EDA the ability to buy the church building, the other two, or all three. Soper said the group hoped to start a conversation within the community of how best to use the building as part of an effort to revitalize downtown Versailles. The two adjoining properties should be demolished and used for parking or part of a downtown public space, he said. “We fully understand that the sanctuary is the home of memories for generations of families and any repurpose should protect those memories,” Soper said. Versailles Methodist is planning to build a new church on land it owns on Lexington and Paynes Mill roads.